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HPCL hit by contractor anger at Vizag expansion

Vol 20, PW 4 (03 Nov 16) Midstream & Downstream

Howls of protest from potential contractors have greeted plans by HPCL to introduce e-tendering and reverse auctions in tenders for its $3bn refinery expansion at Vizag that will see capacity rise from 8.33m t/y to 15m t/y.

Originally scheduled for a single day, HPCL and its consultant Engineers India held a two-day pre-tender meet from October 19 to 20 because of the massive and vociferous response. During the meeting HPCL and Engineers India asked if companies would prefer to bid through the government's website or in physical form as now.

Without a single dissenting voice, contractors unanimously argued for the present system to continue. "E-tendering is fine if HPCL uses its own website because confidentiality is assured," one participant tells us.

"We aren't sure if this will be so on a government website." He further adds that government websites are slow so it might be hard to upload large bid document files. Likely bidders also sharply criticised the proposal to hold reverse auctions instead of the present system of awarding the contract to the lowest bidder.

Reverse auctions, they complain, lead to cut-throat and unfair competition. "These days prices are very low in any case," adds our source.

"Pushing them down further through a reverse auction will hit the quality of work." HPCL wants work completed within 20 to 30 months of the LoA.

Also generating anger is EIL's condition that HPCL is liable for excavation damage not exceeding three metres below surface. "There could be cables or old pipelines further down," complain a source. "For some of the proposed revamp jobs piling is needed (concrete slabs need to be installed). That will go deeper than three metres." Among those in attendance were Larsen & Toubro, Technip, Fluor Daniel, Petrofac, Hyundai Industries, a consortium of CTCI and Cinda, GS Engineering & Construction, Tecnimont, ThyssenKrupp, Essar Projects, Punj Lloyd, Indian OilTanking, Tata Projects, Black & Veatch, Toyo Engineering, Samsung Industries and Linde. During the meeting HPCL announced there would be 11 packages worth around Rs2000cr ($298m) each. For the revamp units the prequalification results are due by mid-November; for the Crude and Vacuum Distillation, Full Conversion Hydrocracker and Naphtha Isomerisation Units they are due by end-November. Tenders for the revamp units will be out by December while those for the Crude and Vacuum Distillation Unit will be out by January 2017 and for the Naphtha Isomerisation and Full Conversion Hydrocracker tenders are expected by March 2017.

Also generating anger is EIL's condition that HPCL is liable for excavation damage not exceeding three metres below surface. "There could be cables or old pipelines further down," complain a source. "For some of the proposed revamp jobs piling is needed (concrete slabs need to be installed). That will go deeper than three metres." Among those in attendance were Larsen & Toubro, Technip, Fluor Daniel, Petrofac, Hyundai Industries, a consortium of CTCI and Cinda, GS Engineering & Construction, Tecnimont, ThyssenKrupp, Essar Projects, Punj Lloyd, Indian OilTanking, Tata Projects, Black & Veatch, Toyo Engineering, Samsung Industries and Linde. During the meeting HPCL announced there would be 11 packages worth around Rs2000cr ($298m) each. For the revamp units the prequalification results are due by mid-November; for the Crude and Vacuum Distillation, Full Conversion Hydrocracker and Naphtha Isomerisation Units they are due by end-November. Tenders for the revamp units will be out by December while those for the Crude and Vacuum Distillation Unit will be out by January 2017 and for the Naphtha Isomerisation and Full Conversion Hydrocracker tenders are expected by March 2017.